Heritage and Satellite Manufacturing: Firm-level Competitiveness and the Management of Risk in Global Production Networks

abstract

This article explores the role that product- and firm-centered heritage plays as an advantage-creating resource and competitive dynamic in contributing to minimizing risks for firms in global production networks (GPN). Research on the management of risk has been identified as critical for developing an understanding of the underlying determinants of GPN. In the satellite industry, key risks relate to launch, extreme conditions in outer space, and challenges concerning repair. These risks are minimized by the development and management of heritage. Heritage is a reputational asset founded on proven technology embedded in products and/or firm-based relationships that have values or associations that accumulate and are passed down over time. The risks associated with the space sector are extreme; however, heritage also plays an important but unacknowledged role in other economic sectors, including shipping, nuclear energy, rail, medical technologies, and aviation. The article adds to the economic geography literature in three ways. First, it highlights the central role that regulators and insurance providers play in defining market imperatives for GPN. Second, it identifies and explores heritage as a reputational asset, providing both a source of competitiveness and a competitive dynamic influencing firm-based routines and interfirm relationships. Third, it provides the first in-depth analysis of the satellite industry in the context of heritage—a sector that impacts on the everyday activities of government agencies, citizens, and firms. This analysis of heritage is based on eighty in-depth interviews with representatives from across the UK space sector.

Key words:

• risk
• heritage
• competitive advantage
• competitive dynamic
• GPN
• satellite manufacturing
• regulation
• insurance

Acknowledgments

We are grateful to Henry Yeung for handling the editorial review of this article and for his guidance on the three rounds of revisions. The constructive comments from the three anonymous reviewers on different drafts of this article were most welcome, since they challenged us to refine and develop our argument. Useful feedback on earlier versions of this article was received at the American Association of Geographers Conference (Chicago, 2015), Royal Geographical Society Conference (London 2017) and the Global Conference on Economic Geography (Cologne, 2018). We would also like to thank our colleagues at City-REDI, Dr. Lauren Andres, Professor Dariusz Wójcik, Dr. Julian Clark, Amy Cable, and Professor Neil Coe for their constructive comments on this research. The research was undertaken with funding from the Economic and Social Science Research Council (ESRC) (ES/J50001X/1). We thank the interviewees and the participants at the stakeholder events who gave their time to discuss this topic; without them the research would not have been possible. Any errors are our own.

Notes

¹ Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies, October 10, 1967, 18 U.S.T. 2410, 610 U.N.T.S. 205.

² March 29, 1972, 24 U.S.T. 2389, T.I.A.S. No. 7762, 10 I.L.M. 965.

Additional information

Funding

This work was supported by the Economic and Social Research Council: [Grant Number ES/J50001X/1].